Monday, January 14, 2002

GOP remains committed
to tax cuts, privatization

By Leila Fujimori

In tough economic times, Republicans hope to garner support in the upcoming legislative session with familiar tax cut proposals and privatization of government services to alleviate the state's money woes.

The most effective way to help the economy would be to reduce the tax burden, Republican House representatives said yesterday as they unveiled their minority legislative package.

Republicans again proposed eliminating the general excise tax on grocery food, medical services and residential rent, which would save a typical family of four about $400, said Rep. Charles Djou (R, Kaneohe).

The proposal would cause an estimated loss in tax revenues of $120 million to $175 million, but Republicans say the money will make its way back to state coffers by creating more economic activity, generating more tax revenues.

Also being proposed are two tax holiday bills, which would suspend taxes on retail sales and payroll for a short, defined period to boost the economy.

Republicans criticized the governor's proposal for an across-the-board budget cut of 1 percent to 2 percent, saying it is not aggressive enough and should be selective.

Rep. Joe Gomes (R, Waimanalo) suggested slashing 30 percent from the Department of Business, Economic Development & Tourism's budget.

Gov. Ben Cayetano responded by saying his proposal is probably the best plan without hurting the University of Hawaii and public schools.

"When they talk about tax cuts, they never seem to explain how they're going to make up the loss in revenues," he said.

He said DBEDT's budget is only $7 million to $8 million and that many agencies are connected to it, such as the Natural Energy Lab, which develops marine products.

Republicans say privatization would also save money because private companies can do the job more cheaply than the state.

Cayetano countered by saying the Republicans have fought privatization efforts in the Ala Wai Boat Harbor.

"There's a lot of hypocrisy in this whole thing," he said.

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